Memphis Merchant Cash Advance Attorney
Memphis Merchant Cash Advance Attorney: Your Guide to MCA Financing in Tennessee
Merchant cash advances (MCAs) have become a popular alternative to traditional small business loans in recent years. Many Memphis business owners have turned to MCAs for quick financing – but these advances come with risks. This article provides an overview of merchant cash advances in Tennessee, common issues that arise, and how working with a Memphis merchant cash advance attorney can help protect your rights.
What is a Merchant Cash Advance?
A merchant cash advance works differently than a regular small business loan. Here’s how it typically works:
- An MCA company provides your Memphis business with an upfront lump sum of cash – often between $5,000 – $500,000.
- In exchange, you agree to repay the advance through daily payments which amount to a fixed percentage of your credit card and debit card sales – usually 10-20%.
- There is no set repayment schedule. The MCA company deducts the daily payments from your merchant account as credit card sales come in.
- The payments continue until the full cash advance amount plus a fee is repaid. This often takes 6-18 months.
MCAs are not technically loans, so they avoid regulations that govern lending. MCA companies can charge higher fees and rates than lenders.
Pros and Cons of Merchant Cash Advances
Merchant cash advances offer some benefits but also major drawbacks for Memphis businesses:Pros:
- Fast funding – Money can be approved and received in a few days or weeks
- Based on credit card sales, not credit score – Good option for newer businesses
- No collateral required – Your credit cards sales repay the advance
- Very high rates – The equivalent APR is typically 40-60% or more
- Daily payments fluctuate – Hard to budget when amounts vary
- Payments take priority – Deducted before you access sales revenue
- Costly penalties for late payments – Missed payments incur fees
As you can see, MCAs provide quick financing but the terms are less flexible and more costly than business loans.
Common MCA Issues Facing Memphis Businesses
While MCAs may help Memphis businesses quickly access capital, some companies use predatory practices that create issues down the road. Common problems include:
- Excessively high repayment rates – Some companies deduct 30-50% of daily credit card sales, crippling cash flow.
- Misrepresenting costs – Vague agreements hide the true payback amount and rates.
- Requiring all business bank accounts as collateral – This allows the MCA company to seize other assets.
- Charging expensive penalties – Late fees of $500 per day are common.
- No early payoff allowed – Businesses can’t repay early to reduce costs.
- Confession of judgment clause – This allows companies to seize assets without notice.
If an MCA company engages in unethical or illegal practices, a Memphis merchant cash advance attorney can help fight back.
How a Memphis MCA Attorney Can Help
A Memphis merchant cash advance lawyer can assist in several key ways if you run into issues with an MCA:
- Review the MCA agreement – Analyze terms and ensure it complies with Tennessee laws.
- Negotiate with the MCA company – Fight for better repayment terms or rates.
- Defend against lawsuits – Challenge improper legal action over disputed payments.
- File counter claims – Seek damages if the company violates lending laws.
- Restructure unaffordable payments – Modify the agreement if sales drop.
- Handle bankruptcy – If needed to discharge all or part of the debt.
Don’t let intimidating MCA companies take advantage of you. Know your rights and explore options with an attorney.
Finding the Right Memphis Merchant Cash Advance Attorney
It’s important to work with an attorney experienced in MCA laws and cases. When choosing a Memphis merchant cash advance lawyer, look for:
- Knowledge of MCA agreements – Understands industry terms and practices.
- Familiarity with Tennessee laws – Knows state regulations that apply.
- MCA litigation experience – Has defended other businesses against MCA companies.
- Reasonable fees – Affordable for a small business.
- Good reviews – Talk to past clients about their experience.
Be wary of any lawyer claiming they can make MCA debt completely disappear. While an attorney can help fight unreasonable terms, the debt cannot simply be erased if you received the cash advance.
Tennessee MCA Laws and Regulations
Unlike some other states, Tennessee does not yet have laws specifically regulating merchant cash advances. However, MCA companies still must operate within the state‘s general lending and consumer protection laws. For example:
- Usury laws – Interest rates over 10% may be considered criminal usury. MCA rates often far exceed this.
- Deceptive trade practices – It’s illegal to use deception or false statements to induce borrowing.
- Unfair collection tactics – Harassing borrowers or misrepresenting debts is prohibited.
While Tennessee‘s lack of MCA regulation provides less protection, working with an attorney can still help you leverage existing laws to fight back against predatory lending practices.
The Future of MCA Regulation in Tennessee
In recent years, regulators have started to take notice of merchant cash advance practices nationwide:
- New York and New Jersey banned confessions of judgment in MCA contracts.
- Connecticut restricted prejudgment attachments by MCA companies.
- The FTC sued several major MCA firms for fraudulent practices.
- Federal and state legislators have held hearings questioning lack of oversight.
Many experts expect regulation of the MCA industry to increase in coming years. Tennessee lawmakers may follow suit by enacting laws to improve transparency and prohibit unfair MCA lending terms.In the meantime, consulting with a Memphis merchant cash advance attorney is the best way to protect your interests when seeking or repaying an MCA. Don‘t hesitate to contact an experienced lawyer for assistance.